Consider the mortgage loan of $150,000 at a nominal 6% yearly interest applied monthly at a rate of 0.5% per month. Monthly payments of $1,000 are being made on this loan. Determine how much is owed on this loan at the end of the first, second, third month and fourth months. Show the work that leads to your answers. Evaluate all expressions.

Question

Mathematics

Jasmin Key

16 September, 10:02

Consider the mortgage loan of $150,000 at a nominal 6% yearly interest applied monthly at a rate of 0.5% per month. Monthly payments of $1,000 are being made on this loan. Determine how much is owed on this loan at the end of the first, second, third month and fourth months. Show the work that leads to your answers. Evaluate all expressions.

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Answers (1)

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Jamya Page · Answer 1

First = $149,750

Second = $149,498.75

Third = $149,246.24

Fourth = $148,992.47

Step-by-step explanation:

Monthly payment = $1000

Monthly rate = 0.5% = 0.005

Loan amount = $150,000

Amount owed at the end of first month:

$150,000 + ($150,000 * 0.5) = [ ($150,000 + $750) - $1000] = $149,750

Amount owed at the end of second month:

$149,750 * (1.005) - $1000 = $149,498.75

Amount owed at the end of third month:

$149,498.75 * (1.005) - $1000 = $149,246.24

Amount owed at the end of fourth month:

$149,246.24 * (1.005) - $1000 = $148,992.47